What the new Republican congress REALLY Means for the Economy
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The historical impact of Republicans taking over the senate this year has given the Republicans a powerful chance to reshape the landscape of the United States that has been in turmoil these last six years. This is mainly because of President Obama’s Affordable Care Act, which, if you look at the numbers, is anything but affordable.
The historical impact of Republicans taking over the senate this year has given the Republicans a powerful chance to reshape the landscape of the United States that has been in turmoil these last six years. This is mainly because of President Obama’s Affordable Care Act, which, if you look at the numbers, is anything but affordable.
Table of Contents
Alarming Difference in Numbers
One of the biggest reasons why Republicans regained the senate this year was a huge amount of dissatisfaction amongst voters with the Affordable Care Act. According to the campaign trail, candidates relentlessly hammered the point home, and 48% of voters suggested that President’s healthcare law was going too far, whereas only 21% said it was about right.
Voters made it clear that they were worried about the economy when the vote came into play. So what can the Republican congress and president Obama do together to bring more benefits to Americans? Economists have suggested that the options are limited, but many have said that several actions could help to reinvigorate the economy now that the Republicans are leading the way, in areas such as corporate taxes, energy, trade, and immigration.
Wages in America
Where incomes have grown, the gains have gone mainly to the top ten percent of earners in the country, making the income gap even greater than ever before, according to the Federal Reserve. Wages are at a standstill for many Americans, and the Republicans in charge could help fix this. One of the best inputs from the Republican Party will be to cut corporate taxes that are the highest in the world and one of the main reasons so much money is overseas.
Various Republicans, such as the Ohio Senator Rob Portman, have been aching to cut the corporate tax rate for years. They noted that the top 35% rate exceeds the corresponding tax rate in all other major industrial countries around the world. This has encouraged companies to engage in a wave of mergers between companies in other countries known as an inversion to reap a lower tax rate. This means that corporate profits are moving abroad which just makes sense from the company’s perspective.
Simplify the Tax Code
According to the Republicans, the effective tax rate paid by companies could be a great deal lower than 35% with a lower nominal rate. On top of this, with a simplified tax, everyone would know more about what each company pays in taxes rather than some companies being able to use creative accounting. Every company should pay the same and not have to rely on legions of accountants because of laws like Sarbanes-Oxley that is outstanding for tax accountants but a bane on every company that is afflicted by this burdensome regulation.
Making life rough for American companies, according to the Republicans, helps no one in America.
The overlapping interests have also given some hope to economists that tweaks could be made to corporate taxes. The administration floated a framework for cutting this rip off rate to 28% in 2012, just above the 25% that many Republicans targeted. This is still not quite enough, according to many businesses and conservatives, but it is better than no cut at all. It looks like the President and the Republicans could make this happen if the President was motivated to increase prosperity for Americans.
